US clothing sales rise in June as recovery continues

Overall retail sales during June were up 0.6% seasonally adjusted from May and up 18% year-over-year. That compares with a decrease of 1.7 month-over-month and an increase of 27.6% year-over-year in May. Year-over-year increases were unusually high this spring because most stores remained shuttered during those months last year, but some stores had started to reopen by last June.

Despite occasional month-over-month declines, sales have grown year-over-year every month since June 2020, according to Census data.

Ken Perkins, president of research firm Retail Metrics, says June retail sales came in stronger than expected and compared to Street expectations for a 0.4% decline.

“Heading into today (16 July), markets were concerned that consumers were reallocating spending away from goods to services as they vacation, travel, and take in entertainment, which would dampen June sales figures. This did not materialise.”

National Retail Federation (NRF) president and CEO Matthew Shay notes heading into the back-to-school season, he expects record sales as families purchase electronics, shoes and backpacks for in-person learning this year.

NRF chief economist Jack Kleinhenz adds: “We’re continuing to see an impressive recovery. The economy and consumption are particularly sensitive to government policy, and the boost we saw from government support earlier in the year is continuing to show benefits. Reopening of both stores and the overall economy has progressed, and even higher prices seen in some retail categories reflecting the push-and-pull of supply chain challenges haven’t proven to be a deterrent to spending. As more people get vaccinated and get out, some of the growth will shift to services rather than retail but there’s enough momentum to support both.”

NRF’s calculation of retail sales – which excludes automobile dealers, gasoline stations and restaurants to focus on core retail – showed June was up 0.8% seasonally adjusted from May and up 12.1% unadjusted year-over-year. That compared with a month-over-month decline of 1.9% and a year-over-year increase of 16.5% in May.

NRF’s numbers were up 19.3% unadjusted year-over-year on a three-month moving average.

Sales saw a boost from the annual Amazon Prime Day promotion, which was also joined by many other major retailers. NRF adds record-high temperatures in some parts of the country and tropical storms in others may have affected sales, and methodology the Census Bureau uses to adjust results for seasonal variations may have affected the numbers reported by the agency.

For the first six months of the year, NRF says sales were up 16.4% over the same period in 2020. With the rate of growth expected to slow in the second half of the year, that is consistent with NRF’s revised forecast that 2021 retail sales should grow between 10.5-13.5% over 2020 to between $4.44-$4.56 trillion. As with NRF’s monthly calculation, the forecast excludes auto dealers, gas stations, and restaurants.

June sales were up year-over-year across the board, led by increases at clothing, electronics, and furniture stores, and also up in two-third of retail categories on a monthly basis.

Clothing and clothing accessory stores were up 2.6% month-over-month seasonally adjusted and up 49.4% unadjusted year-over-year.

While sporting goods stores were down 1.7% month-over-month seasonally adjusted but up 11% unadjusted year-over-year.

Meanwhile, online and other non-store sales increased 1.2% month-over-month seasonally adjusted and by 12% unadjusted year-over-year.

Stellar month for apparel

Neil Saunders, managing director of GlobalData, notes as the impact of the stimulus payments starts to fade, retail sales growth is clearly moderating. However, he adds there is no cause for doom and gloom as the overall rates of growth remain extremely elevated.

“In June, total retail sales increased by 18.5% over the prior year and by 21.8% over the same period in 2019. With shoppers spending a combined US$631bn, there is still significant momentum in the consumer economy where sales levels remain well above where they were in the pre-pandemic period.

“Much of the strong growth and boosted spending is the result of higher savings, which continue to give consumers a cushion of financial comfort, plus a not insignificant contribution from generous unemployment benefits and tax refunds, which continue to filter through to bank accounts. As we progress into the summer, several states will start to withdraw enhanced benefits and return to less generous levels, and this could act as a very modest drag on growth in July and beyond. However, we see this as taking the edge off growth rather than causing a major collapse – especially as other benefits, such as child tax credits, will start to come through to households.”

Saunders adds pleasingly, although consumers are now spending more on non-retail categories, such as travel and entertainment, this has not diminished their appetite for buying products. Core retail, which excludes foodservice gas and autos, increased by 12.1% in June. And sales were up by 22.3% compared to the same period in 2019.

“Apparel retailers had another stellar month, with sales up by 49.4% over a very subdued June 2020. From our data, it is evident that many people are now actively refreshing closets as they prepare to vacation, socialise and, in some cases, get back to the workplace. However, the patterns of consumption have changed with a much greater focus on casual, relaxed, and fun clothing. Many mainstream apparel retailers have adapted to this trend, however, some with more formal offerings, such as suiting, continue to suffer relative to where they were before the pandemic.

“We remain confident that this year as a whole will be a good one for retail. Growth will likely continue to moderate and that may generate some scare stories. However, the underlying numbers remain very solid and retailers continue to report good results.”